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Starnet Announces Result of Court Hearing Concerning Investigation by Canadian Authorities

President and Chief Executive Officer Meldon Ellis said, ``While we are disappointed with the ruling, it is consistent with the Court's past opinions. As we expected the Court to grant additional time to the RCMP to complete their investigation, we have prepared for this contingency.

"We have instructed our lawyers to file an appeal with the British Columbia Court of Appeal immediately and believe that our case has considerable merit. We will proceed with this appeal expeditiously and hope to be in a position to set an appeal date within a few months.''

Ellis added, ``Management continues to be disappointed with the handling of this matter by the authorities, from the pace of the investigation to the apparent unwillingness to examine the issues involved. Despite our full cooperation and support of establishing legal precedents that would provide beneficial regulation of online gaming, action by the parties involved has been slow and reluctant. This is unfortunate, given the possible benefits to all parties of resolution.''

Ellis continued, ``We are aggressively pursuing all possible opportunities to resolve the investigation. Restructuring efforts have been designed to enhance the clarity of our operations and eliminate potential misunderstandings of our operations.

"What has become increasingly clear to management over the past year is that while legal institutions in North America have struggled to adapt to the new reality of I-gaming, several international jurisdictions have been more proactive. These jurisdictions provide stable launching pads for our operations and form the foundation of our strategic growth plans.''

``Going forward, we will continue to develop our online gaming operations and expand internationally,'' said Ellis. ``Our revenues are rapidly and consistently growing, and as investments in new software and online pari-mutuel services decline over the next two quarters, we anticipate generating significant positive earnings.

"In the short term, we expect to make several announcements related to our new software and pari-mutuel operations, as well as growth in our core gaming operations. Over the past year, we have built a better Starnet, with enhanced products and services. As a result, we are better positioned than ever to capitalize on industry growth and look forward to a strong year.''

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